Cryptoassets have forced regulators worldwide to reconcile innovation, risk, and financial stability at an unprecedented speed. While the United States remains mired in jurisdictional conflict and Asia moves ahead with divergent models, the European Union has taken a decisive step: MiCA, the first comprehensive crypto regulatory framework in the world. But as Karel Lannoo, CEO of the Centre for European Policy Studies (CEPS), explains in this interview, the real story is not only the legislation itself but the capacity, coordination, and political will required to implement it effectively across 27 member states. Lannoo’s perspective is unusually broad. With nearly two decades of work on EU financial regulation - MiFID, EMIR, banking union, capital markets union - he brings both historical memory and contemporary urgency to the conversation. His insights reveal a Europe that is legislatively ahead but institutionally stretched, technologically curious but structurally fragmented, and globally ambitious but still grappling with old weaknesses in its supervisory architecture.

It is tempting to view MiCA as a purely European creation a signature Brussels achievement. But Lannoo stresses that its intellectual spark was transatlantic. Around 2018–2019, U.S. policymakers, including the SEC and CFTC, were debating whether crypto could fit within existing securities laws. Early versions of U.S. draft bills circulated widely in policy communities. According to Lannoo, a European official stationed in Washington at the time “brought the idea back”, triggering momentum inside the European Commission. This aligns with what many policy researchers have observed: crypto regulation globalised before crypto markets did. Even so, Europe moved faster. While U.S. debates hardened into political gridlock, the EU saw an opportunity to lead and legislated swiftly. Lannoo, however, has long held a contrarian view: “I said at the time we could use existing frameworks like MiFID. We didn’t necessarily need a new regime.” This parallels the view of former U.S. SEC Chair Gary Gensler, who emphasised that “the rules already exist.” Yet Europe opted for clarity over theoretical neatness, building a self-contained regime rather than retrofitting crypto into legacy laws.

Passing MiCA was the easy part. Implementing it across 27 jurisdictions is far harder. ESMA has repeatedly highlighted the capacity gap across national competent authorities (NCAs). Lannoo echoes this concern: Many NCAs especially in smaller or less diversified economies lack: dedicated crypto supervision teams in-house blockchain analytics capabilities long-term staffing capacity cross-border investigative tools practical experience with complex digital-asset models This creates a two-tier Europe.

Germany, France, Netherlands, Ireland

Cyprus, Malta, Romania, Bulgaria, parts of the Baltics Yet ironically, Tier 2 jurisdictions receive the highest number of licence applications - a fact confirmed by ESMA pre-registration data from 2023–2024 showing Cyprus, Malta, and Lithuania near the top of interest volumes. Lannoo notes: “Cyprus sends many questions to ESMA simply to understand how to apply MiCA. They receive many applications, but their capacity is extremely limited.” For MiCA to work, Europe must strengthen the people and institutions responsible for enforcement, not simply the rulebook.

Stablecoins are widely perceived by the public as equivalent to fiat currency. Yet in reality they: Are not legal tender Do not guarantee 1:1 convertibility Behave more like money-market instruments Carry issuer, liquidity, and interest-rate risks Depend on reserve management practices unfamiliar to most consumers The Bank of England, ECB, and BIS have all warned publicly that stablecoin value cannot be assumed under stress. Lannoo notes: “A stablecoin is not the same as a euro or dollar deposit.” The knowledge gap is dangerous — especially since stablecoins have become a de-facto remittance infrastructure. According to Chainalysis, USDT and USDC processed over $1.7 trillion in on-chain value in 2023, much of it between emerging markets. Because traditional cross-border payments still cost 6–8% in many countries, stablecoins fill a practical need. As the IMF has written repeatedly: crypto adoption often rises due to financial inefficiency, not speculation.

Europe is a user of stablecoins, not an issuer. More than 90% of stablecoin activity globally is denominated in USD. This creates structural vulnerabilities: European users hold USD-linked liabilities liquidity sits largely outside EU institutions redemption pressure may fall on a handful of EU-based intermediaries currency mismatch risks may emerge in stressed scenarios The ECB has flagged this in several bulletins, warning of “foreign-exchange transmission channels” created by dollar-stablecoin usage. Lannoo adds nuance: “Today it is not a risk. But if the market grows and redemptions concentrate, it could become one.” The issue is not size - it is asymmetry.

Lannoo draws a bright line between: The Digital Euro legal tender universally accepted issued by the ECB zero credit/liquidity risk a public good Stablecoins optional acceptance privately issued not guaranteed 1:1 depend on reserve assets carry operational and market risk In short: Digital Euro = money Stablecoin = financial instrument Yet most consumers do not understand the distinction. ECB surveys from 2023–2024 confirm widespread confusion between: digital bank money e-money stablecoins CBDCs This lack of clarity is partly due to inadequate communication — and partly due to high European banking costs pushing users toward alternatives they may not fully understand.

Crypto markets operate globally. Regulators do not. The BIS, IMF, and FSB have all emphasised that fragmented regulation is the single greatest long-term risk in digital assets. Stablecoins issued in the U.S. are widely used in: Southeast Asia the Middle East Africa Eastern Europe Yet regulatory treatment differs radically across these regions. Lannoo puts it plainly: “International coordination is essential. But on stablecoins, there is still no global agreement at all.” Even the FSB’s 2023 high-level recommendations remain voluntary. This fragmentation will continue to be exploited until supervisors converge.

MiCA is a legislative achievement - but its success depends on the broader structure of European finance. To regulate crypto effectively, Europe needs: real progress on the Capital Markets Union deeper, more liquid capital markets stronger ESMA powers improved supervisory convergence technological capacity at the national level data-sharing across borders Crypto has simply exposed weaknesses that already existed. Lannoo summarises the point well: “MiCA is a milestone, not a destination. Implementation, capacity-building, and global alignment are the real frontiers.”